Recall that last June I told you that the Supreme Court of Ohio agreed to consider State Farm’s discretionary appeal of the Eighth District Court of Appeals (Cuyahoga County) decision in Cullen v. State Farm Mut. Auto. Ins. Co. Now, nearly eighteen months later, the Ohio Supreme Court issued its decision reversing and remanding the case. 2013-Ohio-4733 (Nov. 5, 2013). Importantly, the Court clarified the requisite “rigorous analysis” of Rule 23 that it mandated over a decade ago in Hamilton v. Ohio Sav. Bank (1998), 82 Ohio St. 3d 67, 71, 694 N.E.2d 422, and aligned Ohio law with the U.S. Supreme Court’s recent decisions, Comcast Corp. v. Behrend, ___ U.S. ___, 133 S.Ct. 1426 (2013), and Wal-Mart Stores, Inc. v. Dukes, 131 S. Ct. 2541, (2011).
Admitting that Ohio class action law was stagnating in sea of confusion, the Court explained that “[t]his case clarifies the standards to apply when an appellate court reviews certification of a class action pursuant to Civ.R. 23.” 2013-Ohio-4733, at ¶1.
First, Cullen put some cracks in the plaintiffs’ windshield that was Ojalvo v. Bd. Of Trustees of Ohio State Univ. (pun intended). Indeed, the dissent goes so far to state that Cullen “overrules” Ojalvo, which may not be an overstatement. Lead plaintiffs have long clung to Ojalvo to argue against the resolution of merits issues at the class certification stage. Cullen, however, clarified that trial courts may (and should, if appropriate) examine the underlying merits of a claim as part of its rigorous analysis. 2013-Ohio-4733, at ¶17-18 (relying on Wal-Mart v. Dukes and Comcast v. Behrend).
Second, Cullen put to rest any doubt over what is the burden of persuasion applicable to the party seeking certification. Specifically, the Court found that a party seeking certification pursuant to Rule 23bears the burden of demonstrating, by a preponderance of the evidence, that the proposed class meets each of the requirements of the Rule. 2013-Ohio-4733, at ¶15, 20.
Finally, the Court explained that “[a] colorable claim does not satisfy the requirements of Civ.R. 23.” 2013-Ohio-4733, at ¶34. Instead, plaintiffs must “demonstrate, and the trial court [must] find, that questions common to the class in fact predominate over individual ones, and proof of predominance necessarily overlaps with proof of the merits . . . .” The Court disagreed with the appellate court that this was done in the underlying case. Id.
Cullen sharpens the landscape of class action law in Ohio. No longer can plaintiffs tiptoe past the certification stage with the hope of achieving an early settlement. Instead, Cullen requires plaintiffs and trial courts be vigilant that the class mechanism is truly the appropriate vehicle to resolve the pending claims.